Ladies and gentlemen, the program is about to begin. At this time, it is my pleasure to turn the program over to your host, Michael Ryskin. May I begin? Great. Thanks, everyone, for joining us for our next session. My name is Mike Ryskin. I'm the U.S. Life Science Tools and Diagnostics Analyst, also covering animal health. For this next session, I'm also honored to be joined by Joshua Shanker, our U.S. Insurance Equity Analyst, who's hot off a plane. I'm surprised he's not still out of breath, but he's that eager to be joining us. We're also excited to be joined by Trupanion. We're joined by Margi Tooth, President and CEO, and Fawwad Qureshi, Chief Financial Officer. Thanks, everyone, for taking the time and being here with us. I'm going to pass it over to Josh since it's his coverage and he'll lead the fireside chat. As always, you know, Boomer, chat, or email, any of us if you want us to introduce any other questions. Josh? Yeah. Fawwad, Margi, thank you for being here today. We really appreciate it. Thank you. I guess, you know, look, we just had the year-end conference call, and obviously you laid out some guidance. Can you tell people how they should be thinking about 2026 and what you think the major points to relay to investors are here? I can take that one. As you said, we just announced our 2025 results. Super happy about the way the year shaped up. It's looking forward to continuing the momentum in 2026. When we think about guidance, similar to what we talked about in 2025, pricing is still going to contribute more as a% of revenue growth in 2026, but less so than it did in 2025. We're seeing that gradual shift of contribution to revenue going from pricing to headcount. Headcount will contribute more at a higher% in 2026 than it did in 2025, but it'll still be a pricing-led year. When we look at loss ratio, pretty similar experience that we saw in Q4 is what we're carrying forward in our guidance. Haven't really seen a significant abatement in inflation as we get into the start of the year, but of course, it's something you take a lot of attention to if you're watching that. Really happy to be able to deliver on the expense leverage. I admitted that we achieved leverage in the second half on fixed expense, and we recovered 60,000% of revenue. We'll continue that momentum going into 2026. You guys see the top line. You see the total percentage. Within that, underneath that, there's a number of things happening, one of which is we continue to invest in technology. We feel technology is a differentiator for the company. We talked a lot in the past about claims automation as a for instance. It's really leading into that, and we're paying for that through efficiencies in the overall expense portfolio. Because of that, we expect to see continued margin expansion from an adjusted operating margin standpoint at the end of the year. All great. When we think about go-to strategy, one thing that we've noticed in the recent past is you've upped the customer acquisition cost spend or policy acquisition cost spend. You can see on a per pet basis, we can see in aggregate numbers, how is the go-to-market strategy changing or evolving as we enter 2026 through vets, through breeders, through direct outreach? What are we spending those dollars on, and how is that allocation changing over time? Yeah. When we think about pet acquisition, in terms of our distribution channel, the vet channel is still, I'll maybe say, still sort of the hotline of every conversation that we have once a pet gets to the vet, and we want to reinforce that with the vet routine as well as with breeders and shelters as well. We're thinking about all stages of early pet ownership and adoption. Our additional spend has really allowed us, much like Fawwad mentioned for technology, kind of building the framework and the labor land and foundation to be able to build up from it. When we were pulling back our pet spend over the last two years prior, we've started to really build that foundation again. We're thinking about making sure the brand is present in hospitals, making sure that breeders understand who Trupanion is and what value that brings to their letters. The same thing with pet parents. We're trying to find them earlier in the funnel, so where they shop, where they consume, where they're browsing, where they're looking for education information, using the data that we have as Trupanion to sort of put that into the eyes and minds of pet parents. It's a multitude of ways that we're pulling together the strategy for acquisition, some of which will deliver quickly. A lot of it, we expect, will just really help to broaden that funnel right at the top so you bring a lot more people through that then get to know Trupanion, which means there are different stages of velocity of how quickly they can move the funnel better. Can you go a little deeper in finding pet parents? I mean, there's one thing about the idea of the vet saying to the customer, "Hey, look, have you thought about health coverage for your pet?" It sounds like that you have more of a pull of finding customers. How does that differ from what's been going on in the past? It's complementary to it. We say that we're looking at finding ways that it's helpful. It eases the conversation when a small dog walks in the door and they're already saying they're insured from a vet perspective. That makes their lives so much easier. We've heard that for years. For us, it's about trying to make sure you're making that conversation quicker and more efficient. Also, the more times that someone sees a brand, we know this from old, that they become more familiar with it. That's more credibility. When it's introduced, they're more willing to listen to what the brand has to say. This is really kind of us building our brand in not only animal health, but actually kind of broadening into the market. I would say just in terms of tactics, I don't want to reel too much, obviously, but we're doing a lot of new things, sort of different things, and kind of thinking about the vet journey, but where do people go before they get to the vet? That's predominantly when they're getting a pet for the first time. They're researching a breeder or shelter. They're looking at things they want to buy for a puppy or kitten. We're really trying to compare those things together to help them when the conversation comes off at that level. You know, I think of Trupanion as the industry leader in pet healthcare insurance. There's obviously been a lot of capital formation, M&A, and putting together businesses. The category continues to grow. I'm not sure that Trupanion is currently growing as quickly as the category as it's been retooling pricing. Historically, you've outgrown the market, which I think is only 4% penetration right now. I expect that's going to continue to grow. A, can you frame what you think the growth for the category is? B, where Trupanion will be in 1 year, 3 years, 5 years relative to the category's growth? There's a lot of that question. Keep me on track here in case I don't answer everything. When we think about overall growth rate, there's a category right over around 4%, 4.5%. The industry figures haven't been released for 2025, I'd expect that we've seen somewhat continuous growth, if not sort of slightly ahead of where we've been trading for the last 5 years. That's a category. We know that with vet costs, that people are leaning into more solutions. They're looking for better solutions than probably they have. Insurance is one of those solutions. There are some others that are coming out in the market. From our perspective, what we've been very clear about for the last couple of years is doubling down to getting the price right. We should members understand why things are the cost they are. We're talking about a compounding increase now of sort of somewhat close to 50%, if not higher than that. It's not members over the course of the last few years. For us, it was important to maintain their retention rate before we lent into growth aggressively. That's not to say we haven't been early pets, but it was more around when we're enrolling a pet, we want to make sure that price comes in place. It's been very deliberate for us to focus member first and then additive. I would say, in general, because of that, I anticipate that certain players in the market have been growing faster than Trupanion because their priorities are different. Moving forward, though, there's absolutely greenfield for everybody. We're not in a situation where the category is a take market, if you will. It's very much building the awareness, building the education. We talked about helping the funnel to build for everybody. From our point of view, we're not going to just grow at all costs. It's been very deliberately focused on highlighting value, looking at the margin we get per pet. We've seen from the numbers Fawwad was talking about in Q4, our margin was at level for the full year, which is the first time in our history we've done that. We now have the confidence to be more aggressive. I would say sort of three to five years out, as we leave that demand and that sort of early adopter moving into sort of majority market, early majority, we fully expect to be aggressive. That's based on deploying the AOI that we've been generating as a business and getting to a growth curve that we've been talking about. Yes, we want to grow with the market. That's absolutely our long-term aspiration for sure. We won't do it at all costs. We believe that when you're playing that long-term game, looking at the reputation of our brand, we're looking at how members can trust us and know that we've moved up coverage, that we're doing what we said, that they keep the product. That's more important to us for the long-term play. We're excited to enter the position to really maximize that in the coming years. I mean, I'm just going to make a comment here that maybe you can dovetail on a little bit, that the product you sell is the most coverage that you can get for $1. That's right. There should be, there's a market for that. I mean, A, should that type of product grow faster than the market, grow at the same pace? Not even Trupanion, but the desire to have as much coverage as Trupanion is willing to provide, should that be outgrowing the market or growing with the market? Look, I think it depends. You've got pockets of people that will want the most comprehensive, and then you've got folks who are going to want something, whether that's access to emergency coverage versus kind of lifetime coverage and the wellness and everything in between. I think there is a space, but it absolutely is the ultimate product. We've always seen ourselves as a leader, and I think our numbers prove that from the lifetime value retention perspective. I think where the market is today, though, I mentioned just a second ago, that we're going into a different phase of market and pet leadership, which is really exciting for the entire category. That's when you're going to start to see it in the broader offering. Consumers are going to demand something a little bit different as they should, and they want more choice. I think our role, having our data, having our experience, having the systems that Fawwad talked about in terms of our AI adoption with our technology, is really helping us to build on how do we then create the next generation product? What does that look like? What features do pet parents want? They have an optionality between what is the best, most comprehensive coverage, and also potentially an early entry product as well that will help them come into the Trupanion family. Yes, I mean, I think it's recommended by more vets than any other product for a reason. We have a highest retention rate for a reason. We're proud of that. There's an absolutely good space for us to continue to grow. You may have seen it's really a more home and auto story about some governors in the United States who are asking for a cap on insurance prices. Really, I don't know if that's the right idea, but they're trying to capture on people's wallets are hurting. Affordability is going to be a big issue in the 2026 election cycle. To what extent is your messaging being successful around, even though we are a more expensive product, we're actually helping you manage your expenses better? Are we still in the phase where sticker shock is the dominant feature about how people think about things, and that's going to be weighing on growth for the next 12 months? Well, thank you for asking the question that way, Josh, because Trupanion is not the most expensive product. Trupanion is actually the least expensive product over the line. The point you make is exactly what we are breaking down in terms of our communication and our efforts around conversion and education that I talked about before, that pet parents don't appreciate what every other provider in the market does. They don't appreciate that the age of enrollment is a unique benefit to Trupanion. We lock in that age at that age because we believe in providing care for the life of the pet. Now, that being said, your point is still absolutely the right one. As I mentioned, we're looking at how do you evolve our products then to make sure that we're doing everything we can for our existing product? Looking at what do we do for the pet parents that, to your point, don't have that money? They still want some comfort. We believe our brand has created sufficient equity in the market today where we can actually go and create something that will not be as comprehensive and might have some different product features and limits, but it will still have direct pay. It will still have the Trupanion brand promise and security that vets know. We believe that that's kind of the next step for us as a category. I'm sure we'll see more market entrants come in because there is that need. You've got that beautiful alignment of the market's growing. There is more awareness. Vets are recognizing the power of an initial client base. Consumers need something to help them protect. Like I said before, we have sufficient data and that brand development in the market that will help us to build on that and create something specific for those members who can't afford their dollars today. You've had a multi-year soft launch, I call it, of lower-value healthcare products in terms of a discount product like PHI Direct and a mid-tier product like Furkin. I think about Trupanion as being a business built around doing what's best for pets' health. To what extent does Trupanion have the skill sets to sell a product that isn't designed around maximizing healthcare for pet needs? Yeah. I think PHI and Furkin, they were launched in Canada, and they are still in Canada. They're still running as businesses acquiring pets. I would say the two of those products launched at a time just before we saw margin compression come through as a business. Our intention with those products was to address both getting better aggressively, bringing them over to the U.S. market, and have a free product sitting as swim lanes. As we look back over the last sort of three years, four years, when we saw that margin compression come through, the first thing we did was, as I mentioned, we put a double down focus on members, and we started to pull back where our acquisition investment was going. We were deploying it into areas with the highest lifetime value. PHI and Furkin, just by the very nature of the type of product they are, was not the highest lifetime value. We stopped really investing in them. We've learned a lot from them. I think if I look back to when we launched them and we started talking about 2021, the whole premise for us was we didn't want to use the Trupanion brand at that point in time. We wanted to create very different products that would compete with other products out there in the market and would clearly define the difference between a high-value product and mid-value product and a low-value product. Between the three of them, I would say it's been a very useful learning curve. We've got a lot of data from different types of pet parents who will buy those three products. Now where we are, as I mentioned, our brand equity has changed significantly over the last few years. We've added a long hospital to our active hospital base, installed a lot more software. We're at a point now where we think that the brand actually will help advance those products in the market because of the trust that Trupanion has created. They've been effective. They've been very helpful, and they're still part of our ecosystem in the back room today. We'll take the best parts of those. We'll build them into the Trupanion concept and then start to kind of bring a slightly different product to market. Now we have the means to do that. We've seen a nice level set with our margin. Anticipate that that pricing will continue to go through over the next few years. It gives us means to deploy not only into core but into other products too. The benefit of having that one brand or them associated under that umbrella is the $1 will go down much further supporting them, whereas before it was incrementally a $1 for PHI and Furkin and $1 for Trupanion, and they weren't all benefiting from the same spend. If we go yeah, you're going forward, please. I'm just going to add a quick point that may be helpful. When you think about pricing as a contributor to repay growth, one of the things that we talked about at the end of 2024 is that was a $ we expected the year-over-year our food increases to kind of beat. For the most part, as you look at 2025 shape of year, it largely played out with price increases where we are now. We felt like we were at least past the peak. It took a lot of work on us to go from significantly compressed margins on some of the 6% that we gained in 2023 for those of you who may not be aware of our target market is 15%. Effectively, we're very happy to get 14.8% for the full year in 2025. We feel like we're in a good space. There's a couple of things happening at the same time. One, we have the margin recovery. Two, we have this trend of our positive free cash flow. We have a financial capacity to not invest. Those are the two conditions that we talked about over the course of last year. We can start accelerating our investment. When we've got margin, we're at a point where we're not going to reach full market share. I like a negative margin share, not market share. We need to be able to have the financial resiliency to make the investments that we want to make in an arms-to-strength way. I feel good about where we're positioned in terms of unleashing those dollars. We see the old guy not much more invested, but I would say we're pretty enthusiastic about what's up in the first few years. If we go back to the post-COVID inflation period, you have a birthday renewal type pricing model, and you ask the regulators for price increases in response to what you're seeing. As inflation is happening, your margins deteriorate because it's happening in arrears. You get to a stability in terms of where your current pricing is matching the inflationary trend. With your 2026 guidance, we see that pricing is coming down. You're responding to a loss-cost trend moderating to some extent. It's going to take you a year for all those prices to reset to the proper level of inflation. Does that mean half your book is going to be at a price that is ahead of the loss-cost trend until we reach the renewal date, and it forces your margins to expand from here? There's obviously good chance that can happen. I mean, we knew going into this, the team has been really eager to get as quickly as we need to. At this point, though, as Fawwad mentioned, we haven't seen costs fading and certainly lower than our expectations, which gives us confidence moving through the year that, first and foremost, we're in a position to be able to afford that cost of goods, which was critical for us. As soon as we see something changed, we will pivot. We'll switch. Some week can go quicker and then others because, as you mentioned, we've got to be able to roll through. Our goal is still to get the same value proposition. We'll be in a different position to where we were in 2022, as you say. We saw that margin compression. I think for us, it's really a case of just watching it, monitoring, and ensuring that we can offer the value prop that we know will drive our own attention rate up. Pricing is moderating. I kind of believe that if I were a customer of Trupanion, I'm not a pet owner, so I can't be a customer of Trupanion. If I were and I got 2 back-to-back 20% price increases and I stayed a customer, I think you can imagine I'm never going to leave, that I got huge price increases and I still love the product and whatnot. I look at the cohort of customers you have, and I assume that they're more loyal than they've ever been, would be my takeaway. Retention is still lower than it was a half-decade ago. Do you expect to return to peak-level retentions because you have a different population that's been through a number of rate increases and stuck around? I mean, retention is improving. It's clear. It's improving modestly, not step function improving. Yeah. I think we do have a loyal base, and I think that's something that we hold it with such high value because we are not in a position to try and take margin where we don't need margin across that far in the value proposition. I think our members have realized that. Their pet parents who understand what they're buying, they understand the value that we can help in their lifetime, so in their pet's lifetime. I think from our point of view, yes, I absolutely think our retention rates can continue to improve. I think over a period of years, we'll get that back to the levels we've historically seen. Now, it'll be different depending on cohorts because you've got if you have a new product entry, that's going to behave differently. We know PHI and Furkin behave differently. I think overall, when we had to put that rate through, as I said, we really pivoted to focus on member dedication, experience, and understand how do we refine our software approach? How do we use tools like AI to help us answer that? That's really kind of building up the member experience further. We'll continue to look at ways that we can supply some delight our members because we don't want to just be associated with price. We've been so encouraged by the numbers the team's been able to develop together with our members. I think we've been doing an outstanding job of it. To still have the retention rates we have, to your point, after not two years but three years of compounding increases, speaks volumes to the product and the quality that we have. It also speaks volumes to the relationships we have within the veterinary space because at the end of the day, when you're using a product, you're speaking to your vet, and your vet is reassuring you that this is the right product for you. When you hear that as a pet parent, it's worth it. I think we all honor that commitment to our members. Over time, we believe that that will continue to grow and get back to those high levels here. Fawwad, please correct me if I'm wrong, but I think if I remember correctly, you guys generated about $41 million in free cash flow this year, op cash flow less capex. I think that was the number, but maybe I'm wrong. Yeah, it was a little higher. It was about 75%, I think. $75 million? I'm sorry. All right. It's interesting. That's actually my point. If we go back in time about 5 years ago, I think that the ethos of the company was to maybe be cash flow neutral in some ways, that every incremental dollar we're generating should be put into acquiring pet parents because the category's growing so quickly that we have a much better use of that capital than anything we could do. Then, of course, we hit the inflationary period and cash flow went negative. You had the capital suck from the other division, the and Pets Best. Is there a different ethos in the company about the purpose of cash flow compared to what you thought it was half a decade ago? Yeah. That's a couple of things. One, quite a bit half a decade ago, the company was much smaller. This company has grown give or take 20% a year. We're talking about a billion-dollar business. One of the things that Margie and I all talked about is we want to have the capacity to be able to make investments through marketing. We want to approach every cycle, every annual planning cycle from a constrained perspective. Yeah, I think having free cash flow obviously gives us choices. It gives us the ability to make decisions, to be aggressive, to see opportunity. We took a goal right when I started. Free cash flow is a percent of revenue to be at least 2.5% of business. This This year, we were closer to 5%. I think about 5%. Yeah, as long as we continue to generate strong margins out of business that will create free cash flow, about two-thirds of that free cash flow is generated by AOI. It's not being created through expense reduction or expansion in businesses in general. Yeah, we feel super healthy free cash flow, stronger balance sheet, lower cost of capital, return to share of debt. We feel really, really well positioned to be able to make investments whenever and loose giving. The other thing I talked about, I think it's an important thing for investors to consider, is there's a lot of opportunities within the company. PAC will always be more likely to always be the biggest source or user of investment dollars. When you think about AOI as a pool of capital, that can be deployed in PAC. We're deploying that out in LabSpec. We're starting to deliver out. Right now, we're in more of a capital-intensive period, so that's consuming some cash. Obviously, from a technology perspective, I spoke about that earlier. It gives us the wherewithal to make investments there that accelerate local things that members see, whether it's LLMs, automation, UX, the overall member experience. There's financial investments we can make. We paid down about 17 and a half million dollars in 2025. I would say AOI as a pool of capital, it can be deployed in a variety of places, the majority of which, obviously, we'll expect that to be in PAC or more importantly, selling pet insurance. It gives us more optionality. That free cash flow is the financial engine that's going to power all of those investments. Yeah. I would just add, Josh, when I think back to what I said quite a bit at the beginning, thinking about how we've shifted, how we've changed. We're such a big organization. For us, this big organization, we still remain rooted in making sure that we can help pet parents and support the veterinary industry. We're also looking at high internal rates of return. What we're never trying to do is just deploying what the AOI and maybe we'll get X now, maybe they'll come through in 10 years. That's not our goal. Our goal is to continue to be disciplined. It is such a lovely position to be in, to know that we've got the means to deploy in things like technology that we can only help our members or help our teams more efficient and effective. It's very much more that kind of long-term thinking. We want to do things that maybe we could have done a few years ago, but we didn't. I think kind of chasing that kind of market growth is helpful in the short term for us, as far as setting ourselves up because we're in a position the market is underpenetrated. We're in a great position. We will continue to deploy higher and higher levels of adjusted operating income to grow the business into pet count at high internal rates of return. We think about that. Then we think about the other things, the opportunities we have that come our way. We think about the fact that we're more and more in control of our own destiny. That sets us up with that extra level of confidence. I think it'll really just help us set the stage for the next few years of business. Two more questions. One, I think that we have a formula about what the ROI of a dollar of PAC is. We sort of know whether it works out that way, but we kind of know what it is. I don't think we know what a dollar of ROI spent on Landspath is. Can you sort of frame how we should think about the value of those two propositions? We're in the early days of it, I don't want to commit to a particular market profile. I think what I would say is, when we look at the opportunity, I think there's a couple of things that differentiate us. This is a product that will be distributed through the vet channels, it will continue to build that relationship. We offer vets, additional source of feed that they can provide to their customers. The long-term unique economics of this business, we believe, because we have proprietary IP, suggests that the market profile of the pet food business can be superior to the pet insurance business. It's going to take time for that business to achieve scale. Again, anything in the near term. Yeah, long term, we're very excited about it. We think it could ultimately end up being as big as the pet insurance business, maybe bigger, with more favorable economics. Okay. Then one more, maybe as a housekeeping question. The 13Fs were filed. Large holder Tarmac eliminated its position, and Felix Holding, I'm not so familiar with our before position. Is this connected? Should we learn anything from the changing holder base at the company? Yes. It's the same. It's one of our directors was moving from Tarmac into Felix Holding is a related entity. Moving from one holding onto another holding, so it's a transfer. They've also increased their position, which is continued support, showing that kind of confidence in the business, which is great. That happened earlier this week. It's the same holder, just transferring to a different fund. Okay. In terms of, I guess, post-quarter, is there any takeaways that you are receiving from investors that you think would be useful to share, what you understand the sentiment is around the stock and what's changing and what isn't? Yeah. I would say, from my perspective, reiterating the opening remarks that Juan made around the confidence going into this year, we absolutely intend to be aggressive from a pet count point of view. That has, I hope, been well understood and hope also that people understand that we now have the means to do that aggressively in a marketplace that will both leverage our existing product, but also what we have coming up too to kind of replicate it for that additional kind of growing market space. One thing that I don't know that we really talked to a huge amount on our previous call, but in the call-ups, we've had a lot of conversations around AI and how we're using that. When we think about those technology investments for us as a business, we've been able to massively accelerate our efficiency within certain areas of our operations, our member experience, because the teams are using those tools. It's just helped us really kind of accelerate that pattern to the benefit of our members. I think when we consider articulating our value proposition, doing things different, smarter, quicker, more personalized, all of those things are coming together that means that we're able to get to better leverage actually. All in all, super excited about the year ahead in an incredibly strong financial position and incredibly apt market for us. We're looking forward to the next few calls to continue with our trajectory. Oh, we can't hear. Josh, you're muted. I'm muted. I was trying to fix the whirlwind. You made it the whole time without that. Yes. I just wanted to maybe give Mike the opportunity with some closing remarks, how this all fits into this animal health theme, maybe, and maybe some concluding remarks. Yeah. Thanks, Josh. Thanks, everyone, for joining. I thought a really great session. It certainly overlaps with a lot of the conversations we have with investors on our side. I know there's a lot of overlap between investors in terms of pet trends, pet parent behavior, spending behavior, and the current macro and sort of how insurance fits into that and helping manage the cost of pet ownership. I think it's all part of one ecosystem. Really appreciate you taking the time and joining us. Thank you, Valerie. Thank you. Thank you all and have a wonderful day. Appreciate it. Thank you.